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Andres Oppenheimer
After two years of gradually losing popular support at home and political influence abroad, Venezuelan President Hugo Chávez could be one of the big winners of a major rise in world oil prices triggered by the Egyptian uprising.
But will oil prices rise enough to give Chávez's 12-year-old regime a second wind, and allow him to win the 2012 elections? Will he be able to resume his checkbook diplomacy in Latin America?
Venezuela's narcissist leader -- if you think this depiction is unfair, consider that in his
His popularity at home is dwindling -- 52 percent of the vote in last year's legislative elections went to opposition candidates, despite massive government propaganda and limited press freedoms -- and Venezuela suffers from a 30 percent inflation rate, growing food shortages and the lowest economic growth rate in Latin America.
But Chávez is betting that the "Egypt effect" on oil prices will save him. Since late January, when the Middle Eastern turmoil started, New York-traded oil prices have gone up by about
Venezuela says it exports about 2.3 million barrels of oil a day, and economists calculate that -- after subtracting subsidized oil sales to Cuba and other countries -- each
Some financial analysts say that, just by staying where they are, oil prices would give Chávez a major financial boost.
"This will definitely help him," says Russ Dallen, head trader with the Caracas, Venezuela-based
According to Dallen, if Egypt manages to carry out a peaceful transition of power and oil prices stay at about
If Egypt's transition is chaotic, and fears over the passage of oil tankers through the Suez Canal drive New York-traded oil prices to
And if the Egyptian turmoil extended to major Middle Eastern oil producers and oil prices reached their previous record of
Other analysts say Chávez won't benefit from the "Egypt effect," among other things, because Venezuela has to pay massive foreign debts, and its oil production is falling dramatically.
Evanan Romero, an energy consultant and former director of Venezuela's
He said that Venezuela's extra oil income will be reduced by massive domestic consumption -- Venezuelans pay less than
"Chávez's financial problems won't be solved this year by the current spike in oil prices," Romero concluded. "What he wins with rising oil prices, he loses with declining oil production."
My opinion: Chávez has been a lucky guy, and record oil prices during the past twelve years have allowed him to buy loyalties at home and abroad. The current rise in world oil prices will no doubt help him, but it won't be enough to allow him to give away cash to voters like in the past.
If oil prices rise above